- What are the advantages of having a trust instead of a will?
- How can a person change a will?
- What is probate and how does it work?
- Things you should know about estate taxes
Planning for the future raises complicated worries and even fears about the unknown. Often, emotions run high when people contemplate the distribution of their possessions after death. However, estate planning includes more than deciding “who gets what.” A good estate plan provides a sense of security and comfort that one’s desires about many future contingencies will be met. Estate planning not only defines a person’s wishes to be carried out after death regarding his or her estate (all the property owned), but also sets out the means for personal well being far into the future. To reach this goal, estate planning encompasses several connected legal areas and techniques.
Elder law is defined by the client rather than by specific legal distinctions. Elder law attorneys specialize in the legal issues facing older people, which may include issues almost as diverse as the entire legal spectrum. The main issues addressed, however, involve advance planning. As they age, many people become concerned about distributing their estates, establishing alternative decision makers in case of mental or physical incapacity, investigating possible long-term care needs (including the type of care and how to finance it), and otherwise ensuring a comfortable retirement. Often, people seek legal techniques for achieving these goals.
Guardianships and conservatorships are established for people who need representatives to oversee their own personal affairs or finances. A child or a person incapacitated by health problems may come under the care of a legal guardian or conservator. This relationship is often established by court order when a child loses a caregiver or an adult becomes unable to deal with personal affairs, but in some instances a guardian may be elected in a will or by the individual directly concerned. Often an individual has both a guardian and a conservator, and the two must coordinate their efforts to give the protected person the best result.
Living will is the popular name for a document providing advance directives on an individual’s health care preferences in case of terminal illness or permanent unconsciousness. Many people hold strong opinions about heroic measures and life-support machines, and living wills offer an opportunity to formalize their wishes. Laws on living wills vary widely from state to state, so it is important to comply with local laws to ensure one’s preferences will be honored.
A power of attorney and a power of appointment allow someone to select an individual for responsibilities or benefits. A power of attorney allows a person to appoint another (called the attorney-in-fact, although the person is not required to be an attorney at law) to act as his or her agent in specified situations. For example, an elderly person may delegate all the powers and responsibilities of a guardian and conservator to a designated individual, using a power of attorney, so that if the person becomes incapacitated the attorney-in-fact quickly can begin making decisions. In contrast, a power of appointment is an individual’s ability to designate an owner or recipient of property. For example, in a will or trust, the owner of property can appoint another to manage or distribute property; the designated person has a power of appointment to choose who receives what property from the will or trust.
Trusts include a variety of arrangements in which a property owner (the grantor) separates the benefits from the burdens of ownership and gives them to different people. The owner of a vacation cabin enjoys the ready get-away, but must pay for its upkeep; if the cabin is put in trust, the trustee manages any repairs and financial obligations for the property, while the beneficiary receives the benefit of its use. A grantor may choose a trust in order to ensure a continuing benefit to the beneficiary as opposed to making a one-time gift. Additionally, a trust may provide tax benefits to the grantor or to his or her estate.
A will is a legal document specifying how a person’s property and assets should be handled after death. A testator(the person making the will) can give instructions on how the property should be divided, who should receive what portions or specific items, and even who will take care of any surviving minor children. A will can establish a trust or make gifts to charity. Without a will, the government determines how property will be distributed, and may impose a substantial tax burden on the estate. Wills must meet state legal requirements to be effective, so professional guidance is important.